I’ve been getting a lot of inquiries lately about the Pynet network, but honestly, I think it’s a pretty suspicious scheme. The story is that it was started by a graduate of Stanford University, but the actual project details are unclear, and they’re just gathering people based solely on promises of the future.

Looking at this system, it has the typical structure of multi-level marketing. They say you can download an app on your smartphone to participate in mining, but in reality, it’s a scheme where you invite acquaintances using an invitation code, and increasing the number of people you recruit boosts your mining speed. In other words, increasing your downline directly benefits you.

Under Chinese criminal law, a pyramid scheme is considered to have formed if there are more than 30 people within the organization and it has at least three levels. Based on the promotional methods of Pynet, it’s highly likely that these conditions are almost met. Especially in China, offline marketing targeting middle-aged and older adults is being carried out, with people who have no blockchain knowledge being persuaded with claims like “it will surpass Bitcoin in the future.”

The situation has changed since exchanges announced listings. Several major exchanges are trying to start trading this coin, and once it begins trading on the secondary market, authorities’ perspectives might shift. In fact, the Public Security Bureau of Hunan Province officially warned in 2023 that “distributing this coin constitutes fraud.”

If you currently hold Pynet and are thinking of selling, you need to understand the legal risks involved. Simply buying and selling on exchanges might carry minimal direct criminal risk, but since cryptocurrency investments are not protected under Chinese law, if the scheme collapses in the future, investors won’t be able to seek civil remedies.

What’s even more dangerous is developing downlines to earn and sell the distributed coins. When the hierarchy exceeds three levels, Chinese criminal law considers the organizers, leaders, and accomplices of pyramid schemes, and they can face up to five years in prison and fines. If the amount exceeds 2.5 million yuan or the number of recruits surpasses 120, sentences of more than five years are possible.

More concerning is that pyramid schemes are considered to have no victims, so if this coin is later classified as a pyramid scheme, participants will receive no compensation, and all their assets will be confiscated and returned to the state treasury. In other words, there’s nothing to lose but everything to potentially forfeit.

This story about Pynet might seem attractive on the surface, but analyzing its actual structure reveals it to be quite suspicious. If you’re considering speculative trading, you should be extremely cautious.